In complaints filed in New York, authorities said investment advisers and hedge funds made more than $276 million in illegal profits or avoided losses by trading before the announcement in 2008 of negative results from clinical trials for an Alzheimer's disease drug being developed by Elan Corp. and Wyeth.
Prosecutors charged Mathew Martoma, a former portfolio manager at CR Intrinsic, an unregistered investment adviser, with securities fraud for allegedly illegally using information about the clinical trial results that he obtained from a neurologist at a hospital involved in the testing.
The criminal complaint did not name the neurologist, which it said was a cooperating witness in the case.
The Securities and Exchange Commission filed a related civil suit Tuesday against Martoma, CR Intrinsic and Dr. Sidney Gilman, a neurology professor at the University of Michigan Medical School. The SEC suit said Gilman was chairman of the safety monitoring committee overseeing the clinical trials of the Alzheimer's drug.
Martoma met Gilman some time between 2006 and 2008 through paid consultations, the SEC complaint says. "During these consultations, Gilman provided Martoma with material, nonpublic information about the ongoing trial," the SEC complaint said.
In mid-July 2008, "Gilman provided Martoma with the actual, detailed results of the clinical trial" before an official announcement on July 29, 2008, the SEC said.
"The charges unsealed today describe cheating coming and going -- specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent," said Preet Bharara, U.S. attorney for Manhattan. "As alleged, by cultivating and corrupting a doctor with access to secret drug data, Mathew Martoma and his hedge fund benefited from what might be the most lucrative inside tip of all time."
MORE HBJ HEADLINES
Find out for yourself how much home you can afford Briefs: Mill Creek economic director elected VP of Washington cities association Haggen finds buyers for 36 grocery stores in California, Nevada Already, EvCC to expand Advanced Manufacturing center U.S., 11 Pacific Rim countries reach trade deal Reports: VW investigation focusing on development managers
Our new comment system is not supported in IE 7. Please upgrade your browser here.